BTB110 Financial Accounting Review

  1. Financial statement information for four different companies follows:

Pine Lake Company / Come By Chance Company / James Bay Company / Lethbridge Company
January 1, 2004
Assets / $80,000 / $95,000 / (g) / $135,000
Liabilities / 50,000 / (d) / $80,000 / (j)
Owner’s Equity / (a) / 60,000 / 45,000 / 90,000
December 31, 2004
Assets / (b) / 124,000 / 190,000 / (k)
Liabilities / 65,000 / 68,000 / (h) / 68,000
Owner’s Equity / 45,000 / (e) / 115,000 / 130,000
OE Changes in year
Investments / (c) / 8,000 / 10,000 / 5,000
Drawings / 10,000 / (f) / 25,000 / 30,000
Total Revenues / 350,000 / 400,000 / (i) / 505,000
Total Expenses / 365,000 / 380,000 / 360,000 / (l)

a)Determine the missing amounts.

b)Prepare the statement of owner’s equity for Pine Lake Company.

2. The following are the account balances for the Kwok Ho Company for April 30, 2005

Cash / 14,752
Accounts Receivable / 7,120
Prepaid Rent / 3,040
Equipment / 23,050
Accumulated Amortization- Equipment / 4,250
Accounts Payable / 5,672
Notes Payable / 5,700
K. Ho, Capital / 33,960
K. Ho, drawings / 3,650
Service Revenue / 11,870
Salaries Expense / 9,840

Other data:

  1. Revenue of $720 was earned but unrecorded at April 30, 2005.
  2. Prepaid rent included $760 of April’s rent.
  3. Amortization on the equipment for the month was $671.
  4. Interest of $57 had accrued on the notes payable by April 30.

Calculate the original net income, and the income after taking into account the additional data.

3. The cash account for Wok Co. at November 30, 2004, indicated a balance of $16,190.95. The bank statement indicated a balance of $21,016.30 on November 30, 2004. Comparing the bank statement and the accompanying cancelled cheques and memoranda with the records revealed the following reconciling items.

  1. Cheques outstanding totalled $5,169.75
  2. A deposit of $4,189.40, representing receipts of November 30, had been made too late to appear on the bank statement.
  3. The bank had collected $4,500 on a note left for collection. The face value of the note was $4000, and the balance represented interest on the note.
  4. A cheque for $2,850 returned with the statement had been incorrectly recorded by Wok Co.as $2,580. The cheque was for the payment of an obligation to Kiser & Co. for the purchase of office equipment on account.
  5. A check drawn for $1,375 had been erroneously charged by the bank as $1,735.

Bank service charges for November amounted to $25.

4. The information provided below is a summary of the Cash account for the Baker Company:

Cash Receipts Cash Payment

Balance, January 1 8,000Payments to suppliers 200,000

Receipts from customers 364,000Payments for operating expenses 140,000

Dividends on equityInterest paid10,000

investments 6,000

Proceeds from sale of Income taxes paid 8,000

equipment 36,000

Proceeds from issue of

bonds 200,000Dividends paid50,000

$614,000 408,000

Cash Balance 206,000

$614,000 $614,000

Required: Determine the amount of net cash provided (used) by financing activities that should be reported in the cash flow statement. (5 marks)

b) The 2004 accounting records of Flypaper Airlines Inc. reveal these transactions and events:

Payment of interest
Cash sales
Receipt of dividend revenue
Payment of income taxes
Net earnings
Payment of accounts payable
for merchandise
Payment for land / $10,000
48,000
14,000
12,000
38,000
90,000
74,000 / Collection of accounts receivable
Payment of salaries and wages
Depreciation expense
Proceeds from sale of aircraft
Purchase of equipment for cash
Loss on sale of aircaft
Payment of dividends
Payment of operating expenses / $192,000
53,000
16,000
812,000
22,000
3,000
14,000
28,000

Required: (10 marks)

Determine the amount of cash provided (used) by operating activities that should be reported on the cash flow statement. (NOT all of the items will be used)